SSE is to cut its household gas price by 5.3% from late March, becoming the second of the UK’s big six energy suppliers to change its tariff following the collapse in commodity prices.

Britain’s energy watchdog welcomed the move but called for further price reductions in the sector, while consumer experts branded SSE’s price cut as “trivial” and a “fig leaf” to appease the media and politicians.

Dermot Nolan, chief executive of Ofgem, said: “This is a move in the right direction, but, if the market is as competitive as suppliers claim, we would expect to see further price cuts. Ofgem referred the market to the Competition and Markets Authority because we feel competition is not bearing down fast or hard enough on consumers’ bills.”

The price cut, which comes after SSE lost 300,000 customers to smaller rivals, will be introduced from 29 March and follows rival gas supplier E.ON’s 5.1% reduction last week. SSE said it will save a typical gas customer on a standard tariff £32 a year.

SSE’s price cut was praised by Amber Rudd, the secretary of state for energy and climate change, as a “step in the right direction”.

However, consumer experts were less impressed. Martin Lewis, founder of MoneySavingExpert, said the reduction did not even come close to matching the decline in wholesale costs.

He said: “Again it’s just a trivial 5% on gas only, not electricity, nothing close to the drop in wholesale prices. Energy firms must be whooping for joy that they can get away with such small cuts. The real picture here is that even after cuts the vast majority of households in the UK are massively overpaying for their energy.”

Lewis said E.ON and SEE customers with typical usage on their standard tariffs will be paying at least £1,050 a year after the cuts, and those from other firms even more. He said the cheapest tariffs, often offered by smaller firms, are around £770 a year on the same usage. “And indeed both E.ON and SSE offer these for those who bother to switch,” he added.

Customers are already voting with their feet: SSE lost 300,000 customers in the first nine months of its financial year, as many defected to smaller utility firms – part of a wider trend. Customer accounts dropped to 8.28 m by 31 December. Even so, the company stuck to its full-year adjusted earnings per share target of 115p and said it would raise its dividend at least in line with retail price inflation.

James Padmore, head of energy at comparison site comparethemarket.com, described the cut as a “Big Six fig leaf”.“The cut merely scratches the surface – £32 a year is not much considering people stand to save on average £336 a year by changing to the cheapest dual fuel tariff.

“This round of cuts are a clear attempt to stop the rot,” he added, referring to SSE’s customer losses.

SSE’s price cut will not take effect until after Easter, but the company said it comes three months before its current price freeze ends. In March 2014, the group pledged to keep energy prices on hold until the end of June 2016.

Alistair Phillips-Davies, chief executive of the Perth-based utility, said it had also achieved a “significant reduction in the number and duration of power cuts experienced by our networks customers”.